Unique content for supply chain management and logistics.
LTD Management provides leading global logistics and supply chain management consulting based on real-world supply chain and logistics experience.
LTD, with its practical experience, brings authority and domain expertise to clients, as our blogs show. From analysis to implementation, for any need, and for any place in the world, LTD can assist.
Click the link in the sidebar to check out our website! Or email to info@ltdmgmt.com

Thursday, May 12, 2016

NORDSTROM STRUGGLING

Is it a coincidence that retailers with click and collect in their omnichannel strategy are struggling?

Nordstrom
Inc. fell as much as 16 percent in late trading after cutting its
annual forecast, adding to evidence that the department-store industry
is mired in a deep slump.
The company now expects earnings of
$2.50 to $2.70 a share, excluding the impact of stock buybacks,
according to a statement Thursday. Nordstrom had previously forecast as
much as $3.35. It also reduced its sales growth predictions to between
2.5 percent and 4.5 percent, down from as much as 5.5 percent.
The
outlook jarred investors a day after Macy’s Inc. gave a similarly bleak
forecast. The fear: Consumers are shifting their spending away from
clothing and other department-store wares, potentially leaving the
companies in a long-term funk. Kohl’s Corp. also posted disappointing results on Thursday, saying simply that shoppers weren’t buying apparel.
“It’s
a bloodbath,” said Poonam Goyal, a retail analyst at Bloomberg
Intelligence. “There’s a structural change in how consumers shop, and
for some reason everything flipped in March.”
Nordstrom shares
fell as low as $37.80 in extended trading following the report. Even
before the tumble, the stock was down 9.2 percent this year.

In Flux

Retailers have been dogged
by a range of problems. There’s no major fashion trend to bring in
shoppers, and many younger customers are opting to buy apparel online
instead. But also consumers are spending more of their money on
technology or experiences, rather than clothing. That means they may
wear an old outfit a bit longer than before and budget those funds
toward something else.
The pace of change in the retail industry
is accelerating, Co-President Blake Nordstrom said in the statement. To
cope with the shift, the company is cutting expenses and reducing its
capital investments. That includes adjusting inventory.
“We
remain committed to serving customers by taking steps that will
continue to meet their expectations while driving profitable growth,” he
said.

Capital Spending

The retailer said in February that
it will slash capital spending by $300 million over the next five
years. This year, Nordstrom will spend about $900 million on
investments, including $300 million on new stores in Canada and its
first location in Manhattan.
As part of its belt tightening,
Nordstrom is cutting as many as 400 jobs, mostly from its corporate
center and regional support teams. It has said that it aims to save
about $60 million this fiscal year. The moves will be completed by the
end of the second quarter, Nordstrom said last month.
In the old
days, retailers would try to bounce back by freshening up their product
line. But if it’s a structural change in how consumers shop, that’s not
so easy.
“They’re spending in different places -- that’s what’s killing them,” Goyal said. “I don’t think it’s a product issue.”